Arnett: State Fiscal Condition – Ranking the 50 States


State fiscal condition is multifaceted and difficult to measure. Using a method developed in previous research, I create the cash, budget, long-run, and service-level solvency indices using fiscal year 2012 data to measure the dimensions of fiscal condition. The five states with the highest-ranked overall fiscal condition are Alaska, South Dakota, North Dakota, Nebraska, and Wyoming. The five states with the lowest-ranked fiscal condition are New Jersey, Connecticut, Illinois, Massachusetts, and California. The top five states all had a surplus in fiscal year 2012 as measured by an increase in net assets, but there are differences in their underlying strengths. I find that the states with the worst fiscal condition have had years of poor financial management across the different dimensions of fiscal condition.


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